Before we venture into that, let us count the ways in which many mergers make sense. Some deals give companies access to new markets, technologies and market share. Others consolidate businesses that fit. Even some deals by private equity allow managers to make hard choices, streamline and create new efficiency. Many reward shareholders on both sides.

Reuters

Lloyd Blankfein, chairman and CEO of Goldman Sachs Group.

Now that we’ve gotten that out of the way, let’s take a real look.

Most deals are driven by boards and management teams that are looking for a quick and sizeable payout. There are golden parachutes for executives who are displaced, and pockets full of rocks for the workers who are often cut in a impotent attempt to hit financial targets.

It’s important for investors to remember that a majority of these deals are fueled by Wall Street’s drive for fees, CEO egos and relentless pressure of investors large and small to cash out.

As I’ve written before, is it any wonder that serial acquirers such as Bank of America Corp.
BAC, +0.22%
and Citigroup Inc.
C, +0.18%
were at the center of the financial crisis? Their misguided purchases of Countrywide Financial, Merrill Lynch and in Citi’s case, nearly everything under the sun, created too big to fail. Read related commentary on Wall Street’s biggest scam.

With stronger stock prices as currency, investors can expect deals. Since the financial crisis, most big institutions have been shedding assets and selling businesses. But this unvirtuous cycle is about to turn. You will see more deals — and fast.

That it hasn’t happened sooner is the source of some angst to those who rely on CEO insecurities to make a living. Many investment banks have been loading up on “restructuring” revenue as they help companies pounded by the financial crisis and sluggish economy.

But those fees are hard-earned. Restructuring is a labor-intensive business that requires immersion into a client’s business. It’s costly. M&A advisory work, however, is a sales job. Deals are often of the cookie-cutter variety with much of the work done by law firms and the companies themselves. It’s relatively easy and very lucrative.

No surprise then that Lloyd Blankfein, the chairman and chief executive of Goldman Sachs Group Inc.
GS, +0.37%
was downright disheartened a couple of weeks ago when asked why M&A had not rebounded along with the economy.

No wonder he’s worried. Goldman fell behind in the race last year to load up on the shrinking pie of deal fees. U.S. advisory firms collected $31.6 billion in 2012, a small slice of overall revenue, but a hugely profitable business, second only to underwriting initial public offerings and at some firms, trading.

This year, that number will likely double, but it will come at a cost. Companies will be disrupted. Cultures will be shocked. Even the deals that don’t come to fruition will be fraught with distraction. Witness Microsoft Corp.’s
MSFT, +0.45%
failed $44 billion bid for Yahoo Inc.
US:YHOO
in 2008.

Forget the tens of millions in fees paid in that quixotic gamble, has either company fully recovered from the dust up?

You don’t need to go to the history books (hello, AOL-Time Warner) to see deals where advisers walked away with big paydays and the companies were left to deal with the wreckage.

Hewlett Packard Co.
HPQ, +0.13%
bought Autonomy in 2011 for $11 billion. A year later, H-P wrote down $8.8 billion due to accounting irregularities. And no, the fees paid to people who should have known about any irregularities weren’t returned.

And to use an in-house example, News Corp
NWS, +1.49%
bought Dow Jones & Co. in 2007 for an announced price of $5 billion. Last year, the company said it would split, effectively cleaving the former Dow Jones properties and other newspaper and publishing assets from the more profitable entertainment properties, to be renamed Fox Group.

In the last quarter, the move cost $23 million. More is expected.

Now, I would not doubt the wisdom of my employer, but it seems like a lot of upheaval, fees and lawyers to carve out something that was just sewn together six years ago.

But that’s how it goes in modern capitalism. The temptation of the merger is just too strong. Lazard Ltd.
LAZ, +1.30%
and Centerview Partners took home the honors and fees on Buffett’s latest deal, but you can bet their competitors have already contacted Heinz rivals in the space.

“You’re going to need scale,” they’ll say.

“You need to maximize your global footprint,” they’ll whisper.

Maybe it will be true.

What’s also true? It probably won’t work they way they promise it will. And if it doesn’t, those advisers will be suddenly hard to find.

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